Serious Questions about Internet Service Raised by Appeals Court Decision

By Otero, Juan | Nation's Cities Weekly, April 24, 2000 | Go to article overview

Serious Questions about Internet Service Raised by Appeals Court Decision


Otero, Juan, Nation's Cities Weekly


In Gulf Power Co. et al. v. FCC, No. 98-6222 (11th Cir.) April 11, 2000), the United States Court of Appeals for the 11th Circuit (Atlanta) rejected most of the electric utility industry's objections to the FCC's pole attachment regulation and deferred consideration of challenges to the pole and conduit rate formulas.

The Court, however, in a divided opinion, raised troubling questions about high-speed Internet over cable and telecommunications systems as well as about wireless attachments. The decision by two of the three judges holds that Internet service is neither cable service nor telecommunications service. If this reasoning were applied generally by other courts, it would be extremely detrimental to cities. Cities, under this line of reasoning, could not collect cable operators' Internet access revenues through the Cable Act's 5 percent franchise fee. The 1996 amendments to the Cable Act provide that a city's cable franchise fee may not exceed 5 percent of the revenues derived from operation of a cable system "to provide cable service."

This is the second time an appeals court in Atlanta has declined to strike down federal laws granting cable TV and telecommunications companies the right to run their lines along power poles. But the 11th Circuit also sided with the utilities by finding that wireless carriers and Internet service providers do not have that right. The 11th Circuit said the utilities' challenge to these provisions was still not ripe for review because the utilities have been unable to prove that the ratemaking authority granted to the FCC is unreasonable. The challenged FCC formula is used when calculating what rates electric utilities can charge the telecom and cable TV companies.

But the court, in a ruling written by Judge Gerald Tjoflat, agreed with the industry's contention that the FCC has no authority to force utilities to provide access to wireless carriers or Internet service providers. "Wireless carriers do not necessarily depend on bottleneck facilities like power poles, because wireless transmitters can be placed in various locations.

It is highly questionable whether there are any bottleneck facilities for wireless systems," Tjoflat wrote. "What is beyond question is that utility poles are not bottleneck facilities for wireless systems. Because they are not ... the act does not provide the FCC with authority to regulate wireless carriers."

The Gulf Power opinion could have wider implications because it undoubtedly will be cited to the 9th Circuit in the pending AT&T v. Portland appeal. The Gulf Power ruling appears to lend support to the position taken by one of the 9th Circuit judges at oral arguments--that cable modem Internet access service may not be a "cable service. …

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